ITO, Dehradun V. M/s. Inderlok Hotels Pvt. Ltd., Dehradun

ITA 6428/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4520 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 03-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAVEEN CHANDRA
• Keywords: Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 6428 /DEL/201 5 A.YR. : 2012-13 INCOME TAX OFFICER, WARD1(3), 13-A SUBHASH ROAD, AAYAKAR BHAWAN, DEHRADUN UTTRAKHAND VS. M/S INDERLOK HOTELS PVT. LTD., 29, RAJPUR ROAD, ANEKAT PALACE, DEHRADUN (PAN: AAACI3785P) (ASSESSEE) (RESPONDENT) REVENUE BY : SH. NAVEEN CHANDRA, CIT(DR) ASSESSEE BY : SH. SANJEEV SAPRA, ADV. ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMPU GNED ORDERS DATED 18.9.2015 OF THE LD. CIT(A), DEHRADUN R ELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED IN THE REVENUES APPEAL READ A S UNDER:- 1. WHETHER THE LD. CIT(A) HAS ERRED IN LAW IN ALLOW ING DEDUCTION U/S. 80IC OF THE I.T. ACT, 1961, TO THE ASSES SEE FAILING TO APPRECIATE THAT SINCE THE TERM ECO TOURISM HAS 2 NOT BEEN DEFINED IN THE INCOME TAX ACT, 1961, THE MACHINERY PROVISION FOR OPERATIONALISING THE SAID DEDUCTION IS ABSENT AND HENCE THE MAIN PROVISION FOR T HE SAID DEDUCTION SHOULD ALSO FAIL. 2. THE LD. CIT(A) ERRED IN FAILING TO APPRECIATE THA T, IF ONLY HAVING AN NOC FROM POLLUTION CONTROL BOARD WAS SUFFICIENT FOR A HOTEL TO BE COVERED WITHIN THE SCOPE OF ECO TOURISM, ALL HOTELS IN UTTARAKHAND SHOULD GET THE S AID DEDUCTION AND THAT WOULD BE AGAINST THE LEGISLATIVE INTENT. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DEDUCTION U/S. 80IC ON SALES OF FOOD TO OUTSIDE PATRONS. 4. THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT O F AO BE RESTORED. 3. THE FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEATED H ERE FOR THE SAKE OF BREVITY. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. HE REQ UESTED THAT THE 3 ISSUE IN DISPUTE MAY BE SET ASIDE TO THE FILE OF THE AO, BECAUSE THE HONBLE HIGH COURT OF UTTRAKHAND AS WELL AS ITAT, I N MANY CASES HAS SET ASIDE THE SIMILAR ISSUE IN DISPUTE TO THE AO. IN SUPPORT OF HIS CONTENTION, HE FILED THE COPY OF THE ITAT, D BENC H, NEW DELHI ORDER DATED 05.4.2017 IN THE CASE OF ACIT VS. UNIQUE HOTELS & RESTAURANTS PVT. LTD. PASSED IN ITA NO. 1726-1727/D EL/2013 (AYRS. 2009-10 & 2010-11) IN WHICH THE TRIBUNAL HAS FOLLO WED THE ORDER OF THE HONBLE UTTRAKHAND HIGH COURT IN THE CASE OF CIT, DEHRADUN VS. ANCHAL HOTELS PVT. LTD. REPORTED IN 287 CTR 233 WH EREIN THE HONBLE HIGH COURT HAS REMANDED BACK THE MATTER TO THE FILE OF AO, WHO WILL AFFORD OPPORTUNITY TO ALL THE ASSESSES A ND PASS FRESH ORDERS TAKING NOTE OF THE OBSERVATIONS WHICH WERE MAD E BY THE HONBLE HIGH COURT OF UTTRAKHAND. 5. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT THERE IS NO NEE D TO SET ASIDE THE ISSUE TO THE AO AND REQUESTED THAT THE PRESENT APPE AL OF THE DEPARTMENT MAY BE DISMISSED. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHOR ITIES AND THE ORDER OF THE ITAT, D BENCH, NEW DELHI DATED 05.4.20 17 IN THE CASE OF ACIT VS. UNIQUE HOTELS & RESTAURANTS PVT. LTD. PAS SED IN ITA NO. 4 1726-1727/DEL/2013 (AYRS. 2009-10 & 2010-11) WHERE IN THE TRIBUNAL HAS HELD AS UNDER:- 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND THE ORDER OF THE HONBLE HIGH COURT OF UTTRAKHAND IN THE CASE OF CIT VS. ANCHAL HOTELS PVT. LTD. (SUPRA). WE FIND THAT THE HONBLE HIGH COURT OF UTTRAKHAND IN THE AFORESAID CASE VIDE PARA NOS. 33 TO 38 HAS HELD AS UNDER:- 33. WE ARE OF THE VIEW THAT IT IS NOT THE INTENTION OF THE LEGISLATURE THAT ANY PERSON WHO SETS UP A HOTEL WITHIN THE TIME LIMITS INDICATED IN THE STATE OF UTTARAKHAND, WITHOUT ANY REGARD TO THE EXACT LOCATION, AND THE MANNER IN WHICH IT OPERATES, ITS IMPACT ON THE NATURE (ENVIRONMENT), ITS RELATIONSHIP WITH THE LOCAL PEOPLE (LOCAL COMMUNITY), WHAT IT DOES FOR THE PEOPLE THERE, INDISCRIMINATELY, ALL SUCH HOTELS SHOULD BE ENTITLED TO CLAIM THE BENEFIT. IT IS TRUE THAT THE WORD 'ECOTOURISM' INCLUDES HOTELS 5 AMONG OTHER ACTIVITIES. WE WOULD THINK THAT IN THE CONTEXT OF THIS CASE, WE WOULD NOT BE UNJUSTIFIED IF WE INTERPRET THE WORD 'HOTEL' TAKING COLOR AND ASSISTANCE FROM THE WORD 'ECOTOURISM'. THE WORD 'ECOTOURISM', IT MUST BE NOTED, APPEARS AT THE BEGINNING OF THE PROVISION. OBVIOUSLY CONFRONTED WITH THE OBSTACLE IT CAUSES TO THE ACCEPTANCE OF THE RESPONDENTS ARGUMENT, MIMANSA PRINCIPLES INVOKED IN THE DECISION OF ISPAT'S CASE ARE RELIED ON BY SHRI PULAK RAJ MULLICK. WE HAVE ALREADY EXTRACTED THE RELEVANT PASSAGE. EVEN APPLYING THE MIMANSA PRINCIPLES, WE ARE AT A TOTAL LOSS AS TO HOW ANY ASSISTANCE WOULD BE DERIVED FROM THE PRINCIPLES LAID DOWN IN THE MIMANSA PRINCIPLE OF INTERPRETATION. THE ARGUMENT APPEARS TO BE THAT SUBORDINATE ACCESSORY MUST BE RENDERED SUBSERVIENT TO THE PRINCIPLE. THERE CAN BE NO QUARREL WITH THE SAME BUT THAT INVOLVES AN ANSWER TO THE QUESTION WHICH IS THE PRINCIPLE. IN FACT, THE ACCEPTANCE OF THE ASSESSEE'S ARGUMENT WOULD 6 RENDER IT NECESSARY FOR US TO DELETE THE WORD 'ECO'. 34. WE WOULD THINK THAT NEITHER THE BLUE PENCIL THEORY NOR THE MIMANSA THEORY CAN BE OF ANY ASSISTANCE TO THE ASSESSEE. THE BLUE PENCIL THEORY IS PREMISED ON THE PRINCIPLE OF SEVERANCE AND IT IS TRUE THAT IT IS EVOLVED TO SEPARATE THAT WHICH IS ILLEGAL FROM THAT WHICH WOULD PASS MUSTER. IN SUCH CIRCUMSTANCES, IT IS AT THE HEART OF THE DOCTRINE OF SEVERABILITY. WE CAN HAVE NO QUARREL WITH THE SAID PRINCIPLES, BUT ITS APPLICATION TO THE FACTS OF THIS CASE IS TOTALLY WITHOUT FOUNDATION WHEN THE LEGISLATURE HAS DELIBERATELY INTENDED ECOTOURISM TO BE AT THE HEART OF ITS DECISION TO GIVE A DEDUCTION. WE ARE AT A LOSS AS TO HOW IT CAN BE ITSELF DONE AWAY IN ORDER TO PROVIDE FOR DEDUCTION TO A HOTEL, WHICH IS MERELY ENGAGED IN TOURISM AND NOT ECOTOURISM. IN OTHER WORDS, WE ARE OF THE VIEW THAT IN THE SETTING IN WHICH ENTRY 15 OF 14TH SCHEDULE APPEARS, IT SHOULD YIELD THE FOLLOWING RESULT. ONLY HOTELS, WHICH 7 WERE SET UP AS ECOTOURISM UNITS OR HAVING SET UP AS ECOTOURISM OR UNITS, WERE EXPANDED AS SUCH, WOULD BE ENTITLED TO THE BENEFIT OF 80-IC. WE WOULD THINK THAT THE SOUL OF THE PROVISION IS ECOTOURISM. VARIOUS FORMS, IN WHICH ECOTOURISM MAY BE PRACTISED AND OPERATED, ARE ENUMERATED AFTER THE GENERAL WORD 'ECOTOURISM'. THE ACTIVITIES MENTIONED SPECIFICALLY MUST SHARE ONE COMMON FEATURE, I.E., THEY MUST BE PURSUED AS PART OF ECOTOURISM. THIS IN OUR HUMBLE VIEW IS THE INTERPRETATION, WHICH WOULD DO JUSTICE TO THE WORDS, THE CONTEXT AND OBJECT OF THE STATUTE. CERTAINLY, THE MERE PROCUREMENT OF A NO OBJECTION FROM THE POLLUTION CONTROL BOARD CANNOT BE DETERMINATIVE OF A QUESTION, WHETHER THE HOTEL FULFILS THE REQUIREMENT UNDER SECTION 80-IC OF THE ACT. MAY BE, IT IS NOT IN DISPUTE, IN FACT, ACCORDING TO SHRI PULAK RAJ MULLICK THAT FOR ALL HOTELS OF A PARTICULAR TYPE, SATISFYING A PARTICULAR REQUIREMENT, NO OBJECTION IS REQUIRED FROM THE 8 POLLUTION CONTROL BOARD. IN THIS CONTEXT, WE BEAR IN MIND THE ARGUMENT OF SHRI H.M. BHATIA, THAT POLLUTION CONTROL BOARD ACTUALLY GIVES NO OBJECTION CONSENT TO OPERATE IN THE CONTEXT OF AIR AND WATER POLLUTION. BY NO MEANS, CAN THIS BE THE SOLE DETERMINANT OF THE QUESTION, AS TO WHETHER THE HOTEL IS ENGAGED IN ECOTOURISM. 35. THEREFORE, NECESSARILY THE ORDER PASSED BY THE TRIBUNAL CANNOT BE SUSTAINED. THE RECEIPT OF THE SUBSIDY CANNOT BE A HURDLE IN OUR TAKING THE VIEW, WHICH WE ARE TAKING AS WE ARE CALLED UPON TO DECIDE THE ACTUAL SCOPE OF THE PROVISION IN THIS APPEAL. WHILE WE DO NOT DISCOUNT THE FACT THAT SUBSIDY MAY HAVE BEEN GIVEN THE ACTUAL INTERPRETATION OF THE PROVISION IS A TASK, WHICH WE CANNOT ABDICATE. 36. EVEN REGARDING THE SITES OF THE ACTIVITIES, WE WOULD THINK THAT IT MUST HAVE SOMETHING TO DO WITH AREAS CLOSE TO NATURE. NO DOUBT, IN THE STATE OF UTTARAKHAND, 9 THE AREA OF NATURAL BEAUTY AND AREAS CLOSE TO NATURE, OFTEN OVERLAPPED IN CLOSE PROXIMITY WITH DEVELOPED AREAS. THESE ARE ALL MATTERS WE WOULD LEAVE TO THE AUTHORITY. IN VIEW OF THE SAME, THE ORDER OF THE TRIBUNAL CANNOT BE SUSTAINED AND THE MATTER MUST BE REDONE. ACCORDINGLY, THE IMPUGNED ORDERS IN ALL THESE CASES WILL STAND SET ASIDE. A REQUEST IS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IF THE MATTER IS SET ASIDE AND REMANDED, IT BE REMANDED NOT TO THE TRIBUNAL BUT TO THE ASSESSING OFFICER. LEARNED COUNSEL FOR THE REVENUE MR. H.M. BHATIA DOES NOT OBJECT TO THIS COURSE OF ACTION. IN SUCH CIRCUMSTANCES, IN VIEW OF THE FACT THAT THE MATTER MUST BE REDONE, WE SET ASIDE THE IMPUGNED ORDERS. THE MATTER IS REMANDED BACK TO THE ASSESSING OFFICER, WHO WILL AFFORD OPPORTUNITY TO ALL THE ASSESSEES AND PASS FRESH ORDERS TAKING NOTE OF THE OBSERVATIONS, WHICH WE HAVE MADE. 37. THE ANSWER TO THE SUBSTANTIAL QUESTION OF LAW NO.1 IS 10 GIVEN IN FAVOUR OF THE REVENUE/APPELLANT BY HOLDING THAT MERELY BECAUSE A NO OBJECTION CERTIFICATE HAS BEEN OBTAINED FROM THE POLLUTION CONTROL BOARD, THE CONDITIONS UNDER SECTION 80-IC WILL NOT BE FULFILLED. 38. IN VIEW OF THE ABOVE, THE APPEALS STAND DISPOSED OF. 6.1 WE ARE ALSO REPRODUCING THE CONTENTION MADE IN THE SYNOPSIS BY THE LD. COUNSEL OF THE ASSESSEE AS UNDER:- ASSESSEE CO. IS RUNNING A HOTEL IN THE NAME AND STYLE OF 'MADHUBAN' LOCATED IN DEHRADUN. DEDUCTION U/S 80-IC OF THE INCOME-TAX ACT ('ACT') WAS INITIALLY CLAIMED IN ASSESSMENT YEAR 2004-05 AND THE SAME WAS ALLOWED BY THE DEPT. TILL ASSESSMENT YEAR 2008-09 VIDE ORDERS PASSED U/S 143(3) OF THE ACT. 11 AO: VIDE ORDER PASSED U/S 143(3) IN AY 2009-10 AO HAS DISALLOWED THE DEDUCTION U/S 80-IC OF RS.39,78,476/- AS CLAIMED. SIMILARLY, VIDE ORDER PASSED U/S 143(3) IN A Y 2010-11 AO HAS DISALLOWED THE DEDUCTION U/S 80-IC OF RS.38,05,564/- AS CLAIMED. CIT(A): VIDE ITS ORDER DATED 23/01/2013 IN AY 2009-10 AND ORDER DATED 20/02/2013 IN AY 2010-11, THE LD. CIT(A) ALLOWED ASSESSEE'S APPEALS AND DIRECTED THE AO TO ALLOW SUCH DEDUCTION U/S 80-IC AS CLAIMED IN BOTH THESE YEARS TO THE ASSESSEE. WHILE GIVING ITS FINDINGS, THE LD. CIT(A) FOLLOWED THE HON'BLE ITAT'S JUDGMENTS ON SIMILAR FACTS IN THE CASES OF BIDHI CHAND SINGHAL AND ANCHAL HOTELS. AGAINST SUCH CIT(A) ORDERS IN BOTH THE YEARS, REVENUE IS NOW IN APPEAL BEFORE THE HON'BLE ITAT. 12 OUR CONTENTION: 1. THE LD. DR HAS FILED A COPY OF UTTRAKHAND HIGH COURT ORDER IN THE CASE OF CIT, DEHRADUN VS. ANCHAL HOTELS PVT. LTD. AS ALSO REPORTED IN 287 CTR 233 WHEREBY THE MATTER WAS REMANDED BACK BY THE HIGH COURT TO THE FILE OF AO, WHO WILL AFFORD OPPORTUNITY TO ALL THE ASSESSEES AND PASS FRESH ORDERS TAKING NOTE OF THE OBSERVATIONS WHICH WERE MADE BY THE HIGH COURT. 2. UTTRAKHAND HIGH COURT VIDE THE ABOVE MENTIONED ORDER IN THE CASE OF ANCHAL HOTELS PVT. LTD. HAD LAID DOWN CERTAIN CRITERIA/PARAMETERS TO BE LOOKED INTO FOR DETERMINING WHETHER THE HOTEL CAN BE CONSIDERED TO BE ENGAGED IN ECO- TOURISM AND CONSEQUENTLY IS ENTITLED TO BENEFIT U/S 80-IC OF THE ACT. 13 3. SUBSEQUENT TO THE ABOVE MENTIONED ORDER DATED 16/06/2016 OF UTTRAKHAND HIGH COURT, THESE CRITERIA/PARAMETERS WERE EXAMINED IN ASSESSEE'S OWN CASE BY THE ID. CIT(A) IN SUBSEQUENT ASSESSMENT YEAR 2013-14 WHERE THE LD. CIT(A) HAS GIVEN ITS FINDINGS THAT ALL SUCH CRITERIA/PARAMETERS ARE BEING MET AND HENCE, THE ASSESSEE'S IS ENTITLED TO DEDUCTIONS/BENEFITS U/S 80-IC OF THE ACT. 4. COPY OF CHART LISTING OUT THE CRITERIA/PARAMETERS LAID DOWN BY UTTRAKHAND HIGH COURT IN ANCHAL HOTEL'S CASE AND THE REFERENCE TO THE FINDINGS OF CIT(A) IN ASSESSEE'S OWN CASE IN AY 2013-14 WITH REGARD TO SUCH CRITERIA/PARAMETERS IS ENCLOSED AS ANNEXURE - I. COPY OF CIT(A) ORDER DATED 27/02/2017 IN ASSESSEE'S OWN CASE FOR AY 14 2013-14 IS ALSO ENCLOSED AS ANNEXURE-II TO THESE SYNOPSIS. 5. ASSESSEE RELIES ON THE FINDINGS AS RECORDED BY THE LD. CIT(A) WHILE DELETING THE DISALLOWANCES U/S 80-IC IN BOTH THE YEARS VIZ. AY 2009-10 AND 2010- 11. 6. BASED ON SUCH FACTS AND CIRCUMSTANCES OF THE CASE, BOTH THE APPEALS AS FILED BY THE REVENUE DESERVE TO BE DISMISSED. 7. AFTER CAREFULLY PERUSING THE DECISION OF THE HONBLE HIGH COURT OF UTTRAKHAND, AS AFORESAID AS WELL AS THE SYNOPSIS DATED 30.7.2017 FILED BY THE LD. COUNSEL OF THE ASSESSEE, WE SET ASIDE THE ISSUE IN DISPUTE TO THE FILE OF THE AO AND DIRECT THE AO TO CONSIDER THE CONTENTION RAISED BY THE LD. COUNSEL OF THE ASSESEE MADE IN THE SYNOPSIS DATED 30.3.2017 AS REPRODUCED ABOVE AND 15 ALSO KEEPING IN VIEW OF THE DIRECTIONS GIVEN BY THE HONBLE UTTRAKHAND HIGH COURT IN THE CASE OF CIT VS. ANCHAL HOTELS PVT. LTD. (SUPRA) AND THEN DECIDE THE ISSUE IN DISPUTE ACCORDINGLY 7. AFTER CAREFULLY PERUSING THE DECISION OF THE TRIB UNAL, AS AFORESAID, WE SET ASIDE THE ISSUES IN DISPUTE TO THE FILE OF THE AO TO DECIDE THE SAME, KEEPING IN VIEW THE AFORESAID DIREC TIONS. 8. IN THE RESULT, THE REVENUE APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 05/09/2017. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 05/09/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHE S